short-time compensation

by Anne KleffmannDr. Tobias Leder

A new federal regulation provides initial guidance on the requirements for short-time work and receipt of short-time compensation.

Key Points:

  • The regulation outlines requirements for:
  • The efficient introduction of short-time working
  • Receiving short-time working compensation
  • The duration and amount of the short-time working compensation

On 13 March 2020, the German Bundestag and Bundesrat passed a law (the so-called “Arbeit-von-Morgen Act,” or  “Work of Tomorrow Act”) in an expedited procedure to temporarily improve the regulations for short-time working compensation in response to the COVID-19 crisis. The legislation aims to support the economy and labor market, based on the recognition that the COVID-19 crisis will result in considerable work absences.

Short-time work is the temporary reduction of working hours with a corresponding reduction in pay. Short-time work zero is the complete cessation of work. The purpose of short-time work is to temporarily relieve the company’s financial burden by reducing personnel costs while maintaining jobs. The loss of remuneration of the employees is usually (partially) compensated by short-time work compensation from the employment agency.

The new law enables the German federal government to facilitate the receipt of short-time work benefits, as well as to extend the benefits by means of a temporary decree regulation that will come into effect retroactively as per 1 March 2020.